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I’ll never forget my first IPO. The story is as old as the hills
of Silicon Valley: It was a great ride … until it flopped. Our
primary business was crushed by an 800-pound gorilla and we
didn’t have the wherewithal to pick up the pieces and make a go
of it. C’est la vie.

I’ve always been a big fan of learning from failure, so while
most of my high-tech brethren like to talk up their successes, I
try to help startups avoid catastrophic failure and get to the
next stage. I say “try” because, while some make it, most don’t.
That’s the nature of the beast.

In any case, I have a pretty unique perspective on what tends to
trip up founders. Here are nine ways I’ve seen startups fail time
and again.

Their entrepreneurs live in a vacuum. It’s easy
for entrepreneurs to become so focused, so wrapped up in their
own vision, that they lose perspective. That’s actually one of
the key benefits to seeking venture capital from firms that know
your target market: they give you feedback and validate your
strategy.

Their idea doesn’t uniquely solve a big problem.
Contrary to the old line, “Everything that can be invented has
been invented,” the more complex the world becomes, the more
problems there are to solve. That said, it’s got to be a big
problem and a way better solution than what’s already out there.

They run out of cash. For every founder that
manages to bootstrap a startup, there are dozens, maybe hundreds
that run out of cash for any number of reasons: they don’t want
to give up a piece of the pie, they don’t budget properly, they
don’t plan for how long it takes to raise rounds of funding,
their burn rate is too high, or some combination thereof.

They invent concepts, not complete products.
Ideas and inventions are fascinating, but consumers and
businesses generally buy complete products they can actually use.
There is a world of difference.

There are big gaps in the strategy. There’s an
old cartoon of two scientists at a blackboard filled with
equations. Right smack in the middle it says, “Then a miracle
occurs …” Some gaps are to be expected, but oftentimes, what
startups leave to be fleshed out later – little things like
low-cost materials, availability of components and infrastructure
– end up becoming showstoppers.

The team does not have what it takes. Some
founders just can’t get along. Others fall apart when the initial
strategy fails, as it often does. Still others are out to make a
quick buck and aren’t committed to working day and night over the
long haul. Any VC will tell you, a big part of what they invest
in is the management team.

Competitors with existing solutions don’t give up so
easily. From disk drives and CMOS chip technology to
pencils and paper, there are barriers to topple the status quo
and, sometimes, old-school solutions that are tried and true and
the powerful companies that market them hang in there far longer
than anyone would expect.

The market moves on them, or moves in an unexpected
way. Markets are a complex phenomenon with lots of
moving parts that are difficult to predict. Moreover, some
entrepreneurs simply don’t think ahead. As the great Wayne
Gretsky once opined, “I skate to where the puck is going to be,
not where it has been.”

They listen to bad advice from the wrong people.
With all the hype over entrepreneurship, the quantity of
information has gone way up while the quality has gone way down.
That means entrepreneurs are getting lots of bad advice from
unqualified sources. The worst thing about it is, when they
actually get good advice that conflicts with what they’ve been
told, they don’t recognize it for what it is. Sad but true.

Perhaps the most important advice I can give you is this: If your
startup fails, it’s worth spending time to understand what went
wrong. That’s the only way you’re going to improve the odds of
making it next time. And, yes, there will be a next time.
Hopefully this list will help you avoid a different pitfall.